Joint press release from Süd-Chemie and Linde: Süd-Chemie and Linde launch production of climate-friendly biofuels

Corporate News

Munich, 7 May 2009 - Süd-Chemie AG, a leading manufacturers of catalysts and adsorbents, and The Linde Group, a leading global company in the sector of gases and engineering, have launched the production of climate-friendly biofuels based on lignocellulosic biomass in Munich.

In the presence of the EC Commissioner for Energy and Transport, Andris Piebalgs, and the Bavarian Minister of Economics, Infrastructure, Transport and Technology, Martin Zeil, a pilot plant was officially opened at Süd-Chemie's research centre in Munich-Obersendling on 27 April 2009. This pilot plant will be using cereal straw to manufacture up to two tons of bioethanol fuel annually.

The process developed by Süd-Chemie and Linde allows biofuels, such as ethanol, to be extracted from plant matter containing cellulose, for instance wheat straw or maize straw, with the aid of enzymes created using biotechnological methods. The partners in this currently unique alliance offer excellent mutual benefits. Whereas Süd-Chemie's expertise lies in the sectors of biocatalysis and bioprocess engineering, Linde's subsidiary, Linde-KCA-Dresden, offers extensive experience in implementing chemical and biotechnological processes on a commercial scale. Compared with the first-generation biofuels already in use today, such as biodiesel made from rapeseed oil, these second-generation biofuels according to experts offer a significant improvement in terms of climate and energy balances, including higher potential for reducing CO2 emissions. In addition, second-generation biofuels do not compete with the cultivation of either food or animal feed.

The EC Commission is expecting second-generation biofuels to make a key contribution to its sustainable energy policy. These biofuels represent a form of renewable energy that can be used to reduce our high dependence on oil on a lasting basis, especially in the transport sector. The new legislation package to implement the EC's climate and energy policy therefore specifically promotes second-generation biofuels.

The pilot plant now opened represents a scaled-down version of the entire integrated manufacturing process required to convert straw into bioethanol. Construction of a larger demonstration plant producing several thousand tons of bioethanol each year is due to commence in the near future. Bavarian Economics Minister Zeil said: "Biofuels are a topic of enormous future significance. The pilot plant is an important step forward toward a ,biorefinery', in which renewable plant-based raw materials are being converted to valuable base chemicals using modern biotechnological methods. Ideally, the whole plant may be utilized in these processes. I would appreciate it very much, if Süd-Chemie and Linde would decide for a Bavarian location for their demonstration plant".

Following this step, marketable large-scale plants for the commercial production of second-generation biofuels from cereal straw and other cellulosic residue will be within reach. A competent partnership will be available to assist potential customers, including ethanol manufacturers, companies active in the petroleum industry, or other enterprises in the industrial and agricultural sectors, as well as investors, in planning and constructing these plants on a worldwide scale.

Edgar Binnemann, Member of the Managing Board and CFO of Süd-Chemie AG, said: "The start-up of this pilot plant demonstrates the systematic implementation of Süd-Chemie's strategy of developing sustainable and ecological manufacturing processes for climate-friendly biofuels to market maturity in an economically efficient manner, based on our considerable expertise in the fields of biocatalysis and bioprocess engineering."

Dr Aldo Belloni, Member of the Executive Board of Linde AG, confirmed: "Based on our know-how and long experience in the production of climate-friendly fuels, we are making a significant contribution to the creation of low-emission energy supplies for the future. We are delighted that with the start-up of this innovative pilot plant, we are now able to produce biofuel on a sustainable and economically viable basis."

About second-generation biofuels

Today's already widely-marketed first-generation biofuels are produced solely from plant matter containing either oil, starch or sugar, for instance biodiesel made from rapeseed oil or bioethanol made from starch or sugar. In the case of second-generation biofuels, however, use is not made of any starch or oil-bearing parts of plants, but only of cellulose-based matter. In this way, more fuel is obtained as a result of the higher energetic yield. Furthermore, this fuel does not compete with food or animal feed, since those parts of the plants containing starch, for instance maize kernels, can still be used to produce food. Second-generation biofuels are also more climate-friendly than fossil fuels, such as oil or natural gas, since during their growth, plants absorb from the atmosphere exactly the amount of climate gas, namely carbon dioxide, that is subsequently emitted when they are used for engine combustion. The introduction of climate-friendly second-generation biofuels is supported by the legislative framework prevailing in both the US and the EU. In the US, a law passed at the end of 2007 stipulates that by 2022, approximately 15 percent of the country's annual petrol consumption (currently 137 bn litres) is to be replaced by biofuels, almost 60 percent of this based on lignocellulosic residues. The Renewable Energy Directive passed by the EC Parliament in December 2008 requires that by 2020, renewable sources of energy must account for at least 10 percent of the fuel used to transport goods and passengers. The annual volumes of surplus cereal straw currently available in the EU would produce more than enough second-generation bioethanol to meet the EC's 10-percent substitution goal.

About Süd-Chemie

Süd-Chemie (www.sud-chemie.com) is a publicly quoted (Security Identification Number ISIN: DE0007292005; WKN: 729200) specialty chemicals company headquartered in Munich, Germany and operating on a worldwide scale. Key markets served by its Adsorbents Division include the consumer goods, packaging and foundry industries, as well water treatment. Products manufactured by the Catalysts Division offer solutions for the chemical, petrochemical and refinery industries, for energy storage and hydrogen production, as well as off-gas purification. The common denominator of all Süd-Chemie products and services is the efficient and sparing use of natural resources to enhance the quality of life for humans and the environment. The Süd-Chemie Group generated sales of €1.191 billion in 2008, approx. 80% of these outside Germany. At the end of March 2009, the group employed more than 6,300 people in its 80 sales and production companies worldwide.

About The Linde Group and Linde-KCA

The Linde Group is a world leading gases and engineering company with almost 52,000 employees working in around 100 countries worldwide. In the 2008 financial year it achieved sales of EUR 12.7 billion. The strategy of The Linde Group is geared towards sustainable earnings-based growth and focuses on the expansion of its international business with forward-looking products and services. Linde acts responsibly towards its shareholders, business partners, employees, society and the environment - in every one of its business areas, regions and locations across the globe. Linde is committed to technologies and products that unite the goals of customer value and sustainable development.

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